April 24 (Bloomberg) -- The U.K. Financial Conduct
Authority has started an inquiry into how the so-called ISDAfix
rate is set in British pounds, widening a price-manipulation
probe into benchmark interest-rate swaps that began in the U.S.

The FCA is working with the U.S. Commodity Futures Trading
Commission and is in the early stages of its review, according
to two people familiar with the matter, who asked not to be
named because the inquiry is ongoing. The London-based regulator
hasn’t opened a formal investigation, one of the people said.

The British regulator’s review comes after the CFTC issued
subpoenas to current and former brokers at ICAP Plc in Jersey
City, New Jersey, the International Swaps & Derivatives
Association and as many as 15 Wall Street dealers as part of its
probe of the dollar-denominated rate, Bloomberg News first
reported April 8. ISDAfix rates help determine everything from
interest on annuities to borrowing costs on bonds linked to
skyscrapers.

The FCA, previously known as the Financial Services
Authority, began looking into manipulation of the London
interbank offered rate in 2009 after the CFTC requested its
assistance the prior year. The British agency opened a formal
investigation of that rate in early 2010.

Chris Hamilton, a spokesman for the FCA, declined to
comment as did Steve Adamske, a CFTC spokesman.

Compliance Policy

SEC’s White Said to Schedule Vote Soon on Cross-Border Swap Rule

Securities and Exchange Commission Chairman Mary Jo White
may schedule a vote as early as next week on a proposal to
determine the overseas reach of U.S. rules designed to reduce
risk in the $639 trillion global swaps market, according to
three people briefed on the matter.

The five-member commission could meet as soon as May 1 on
the Dodd-Frank Act rule that would affect trading in credit-default and equity swaps, according to the people, who asked not
to be named because the schedule is private.

The vote may still be delayed because some commissioners
are seeking more time to consider the complex, 1,000-page
regulation, the people said. It would apply to trades by banks
including Deutsche Bank AG, JPMorgan Chase & Co. and Goldman
Sachs Group Inc.

The SEC and U.S. Commodity Futures Trading Commission,
which share oversight of the swaps market, have come under
pressure from overseas officials to limit the reach of rules.
The conflict has led U.S. lawmakers to introduce legislation
that would rein in the agencies’ efforts.

John Nester, an SEC spokesman, declined to comment.

In a letter last week, nine overseas finance officials
urged Treasury Secretary Jacob J. Lew to limit the reach of
Dodd-Frank swaps rules that they say are fragmenting the market.

Carmakers Urged to Ban U.S. In-Car Facebook and Twitter Use

U.S. regulators yesterday issued guidelines for automakers
intended to limit distractions from the use of Twitter Inc. and
Facebook Inc. through in-vehicle infotainment systems.

The Transportation Department, in non-binding guidelines,
asked automakers to bar the use of social media sites and
Internet browsing when a vehicle is moving. Automakers are also
urged to design navigation and other screen-based systems so
that drivers don’t need to take their eyes off the road for more
than two seconds to select an option, or for a total of 12
seconds to complete an entire task such as entering an address.

Automakers complained about the draft guidelines issued
last year, saying limiting the use of in-vehicle technology
would cause drivers to revert to using more dangerous handheld
devices. The Alliance of Automobile Manufacturers, whose members
include General Motors Co. and Toyota Motor Corp., said its own
guidelines were less restrictive.

The alliance, based in Washington, said it’s concerned that
the government is only addressing equipment installed in
vehicles and that will lead to more use of handheld phones and
other devices.

For more, click here.

EU Assembly Seeks Depositor Preference in Bail-In Law Deal

Uninsured depositors would be placed last in line for
forced losses, or bail-ins, at failing banks under draft plans
agreed on by the European Parliament, according to the
assembly’s lead legislator on the measures.

Lawmakers from the “major political groups” included the
change in a draft accord on legislation aimed at shielding
taxpayers from having to rescue banks, Gunnar Hoekmark, a
Swedish member of the EU parliament, told reporters in Brussels.
Unsecured debt with a maturity of less than one month and
deposits of as much as 100,000 euros ($130,000) would be
exempted from losses, he said.

There is a “broad majority” in favor of the proposals,
which must be negotiated with national governments, Hoekmark
said. A vote in the assembly’s Economic and Monetary Affairs
Committee will be scheduled “as soon as possible,” he said.

Michel Barnier, the EU’s financial services chief, proposed
creditor writedowns last year as part of a package of measures
to tackle too-big-to-fail lenders. National governments and the
EU Parliament are considering the plans against the backdrop of
last month’s rescue deal for Cyprus, in which the island nation
bowed to demands from creditors to shrink its banking system and
write down deposits of more than 100,000 euros.

Cyprus’s parliament voted against an earlier accord that
would have also imposed losses on savers with less than 100,000
euros. Such so-called insured deposits are protected under EU
law, which requires nations to make reimbursements.

Secured debt, such as covered bonds, would be protected
from losses under the plans.

Once the parliament has voted on the plans, lawmakers will
negotiate with national governments on the final version of the
law.

Compliance Action

MetLife Lifts Dividend First Time Since 2007 After Bank Exit

MetLife Inc., the largest U.S. life insurer, raised its
dividend 49 percent in the first increase since 2007, after its
exit from banking limited oversight from the Federal Reserve.
The company gained the most since January in New York trading.

MetLife is returning capital to shareholders after scaling
back its U.S. oversight. The insurer exited bank status in
February after reaching deals for the sale of deposits and
reverse-mortgage and home-loan units. Smaller rivals including
No. 2 Prudential Financial Inc. didn’t face the same
restrictions and raised their payouts.

As one of the largest bank-holding companies, MetLife had
to submit its capital plans for Fed approval. The Fed last year
rejected MetLife’s plans to repurchase $2 billion in shares and
boost its annual dividend to $1.10 after finding that it would
fall short of U.S. capital standards in a severe economic
downturn.

MetLife has said banking rules aren’t a good fit for life
insurers, which often retain policyholder funds for decades
before paying benefits and may be less vulnerable to client
withdrawals. U.S. insurers are mostly regulated by states.

MetLife may eventually be regulated by the Fed as a non-bank systemically important financial institution after exiting
bank status, Kandarian said in December. Prudential Financial
Inc. and American International Group Inc. have also said the
Fed may deem them systemically important.

Kookmin Bank’s Tokyo Branch Probed by Japan FSA, Lender Says

The Financial Services Agency is investigating a suspicious
deposit made by a client of the South Korea commercial banking
company claiming the money was inherited, says a Kookmin Bank
official who declined to be named, citing company policy.

Seoul-based Kookmin Bank is internally investigating the
deposit, according to the bank official.

Hiroshi Okada, an FSA spokesman, declined to comment about
the investigation.

Kookmin is a unit of KB Financial Group Inc.

China Said to Plan Easing Life Insurance Rules to Aid Sales

China plans to allow life insurers to pay higher returns on
some policies, a person with knowledge of the matter said. That
may make them more attractive for investors stymied by
government limits on bank deposit rates.

The China Insurance Regulatory Commission may scrap the 2.5
percent maximum rate on fixed-return policies in a trial
starting as early as next month, said the person, who asked not
to be identified because the matter isn’t public. To contain
risks, rules on how much insurers need in reserves for payouts
won’t change, which may prompt them to boost the amount prepared
by about 20 billion yuan ($3.2 billion), the person said.

Premium growth has slowed as Chinese savers, seeking higher
returns, turn to riskier investments such as wealth management
products. Removing the cap on returns may revitalize revenue
growth while also channeling savings away from less-regulated
investments known as shadow banking.

One concern for the regulator is that allowing higher
returns may cause more clients to end their current policies,
the person said. The forecast for higher reserve needs is based
on the regulator’s base-case scenario, which predicts
redemptions will increase by less than 50 percent by value from
the current level, according to the person.

That scenario estimates that returns on policies will rise
to close to the five-year bank deposit rate of 4.75 percent, the
person said.

Offering higher returns may also crimp profits. China Life
reported a 40 percent slump in net income last year as it
recognized losses on investments in stocks.

Insurers that offer returns on policies of more than 3.5
percent will need regulatory approval and must set aside
additional reserves, the person said. Such reserves would be
reflected in the companies’ solvency ratios, the person said.

For more, click here.

Courts

Credit Suisse Securities Sues to Block Arbitration by Finra

Credit Suisse Securities LLC sued to block a Financial
Industry Regulatory Authority arbitration, arguing that the
investors who initiated the claim don’t fit the Finra definition
of “customer” required for the dispute-resolution process.

The investors named in the complaint bought exchange traded
notes underwritten by Credit Suisse called TVIX, on the
secondary market, “through accounts or advisers unaffiliated
with Credit Suisse” Credit Suisse said in a complaint filed
April 22 in federal court in Baltimore.

VLS Securities LLC, of Darien, Connecticut, a marketing
agent for TVIX, also is a plaintiff in the suit and a
respondent, with Credit Suisse, in the arbitration claim.

“The individual investors sued by Credit Suisse and VLS
have already received a Finra ruling denying a motion to move
their cases outside of Finra,” said Cynthia Moulton, of Moulton
& Arney LLP, an attorney for the investors. “We intend to
contest Credit Suisse and VLS’s efforts to obtain a different
result in federal court.”

The case is Credit Suisse Securities LLC v. Fesenko, 13-cv-1187, U.S. District Court, District of Maryland (Baltimore).

Corzine Sued by MF Global Trustee for 8th Biggest Bankruptcy

Jon Corzine, the former head of MF Global Holdings Ltd.,
failed to oversee the futures broker, leading to the eighth-biggest bankruptcy in U.S. history, according to a lawsuit filed
by Louis J. Freeh.

Corzine, a former governor and senator from New Jersey and
once a co-chairman of Goldman Sachs Group Inc., was sued along
with senior executives Bradley Abelow and Henri Steenkamp in
U.S. Bankruptcy Court in Manhattan yesterday. Freeh, a trustee
for the failed holding company of the brokerage, alleged that
they failed to act in good faith and implemented strategies that
caused the company to fail.

During their tenure, the three executives “dramatically
changed the company’s business plan without addressing existing
systemic weaknesses that ultimately caused the plan to fail,”
Freeh said in the complaint.

The lawsuit seeks unspecified damages “to be determined at
trial,” as well as legal fees, according to the 61-page filing.
It follows a 124-page report published this month by Freeh which
blamed Corzine and his management team for bungling an expansion
of the company’s traditional business model while ignoring
deficiencies in its risk controls.

The parent company of brokerage MF Global Inc. filed for
bankruptcy on Oct. 31, 2011, after a wrong-way $6.3 billion
trade on its own behalf on bonds of some of Europe’s most-indebted nations. The company listed assets of $41 billion and
debts of $39.7 billion.

There is no basis to the claim that Corzine breached his
fiduciary duties or was negligent, said Corzine spokesman Steve
Goldberg in an e-mailed statement.

“To the contrary, Mr. Corzine was recruited to revitalize
a troubled company, and during his entire tenure as CEO he
worked tirelessly with the Board, firm management and world
class consultants to improve MF Global’s operations and
performance,” Goldberg said. Freeh’s lawsuit ignores the
failure of counterparties to fulfill their obligations to MF
Global, he said.

The holding company’s Chapter 11 case is In re MF Global
Holdings Ltd., 11-bk-15059, U.S. Bankruptcy Court, Southern
District of New York (Manhattan). The liquidation of the broker
is In re MF Global Inc., 11-bk-02790, in the same court.

For more, click here.

Interviews/Hearings

SEC’s Aguilar Asks If AP Twitter Hacking Aimed at Stock Market

SEC Commissioner Luis Aguilar told Bloomberg’s Joshua Gallu
he has asked staff to look at whether hacking of AP’s Twitter
account was done with aim of manipulating the market.

The false report of explosions at the White House that
wiped out $136 billion from the S&P 500 in about two minutes
also raises questions about recent SEC guidance that companies
can use social media to release material information as long as
investors know where to look for it, Gallu reported.

“It would be prudent for companies to at least start
thinking about the risk of security issues at social media
outlets where the company has no control from a security
standpoint,” Gene Goldman, partner at law firm McDermott Will &
Emery, said in interview. Companies would need to “constantly
monitor the executives’ social media account and immediately
correct any false information disseminated through hacking,”
Goldman said.

AP’s Twitter account was suspended after being hacked and
false tweets were sent about an explosion at White House, and
injury to president.

Comings and Goings

Australian Government Names Peter Kell as ASIC Deputy Chairman

The Australian government appointed Peter Kell as deputy
chairman of the Australian Securities and Investments Commission
for five years from May 6, and Cathie Armour as a full-time
commissioner of ASIC for four years from June 3.

With the appointments, and the departure of current Deputy
Chairman Belinda Gibson, ASIC will have five full-time members,
Parliamentary Secretary to the Treasurer Bernie Ripoll said in
an e-mailed statement.

ASIC enforces and regulates company and financial services
laws.

SEC Names Anne Small as General Counsel

The U.S. Securities and Exchange Commission named Anne
Small as general counsel.

Small worked in the White House Counsel’s Office as special
assistant, associate counsel to the president since October
2011, the SEC said in a statement. She has advised on legal
policy questions with a focus on economic issues.